Hayduke asks
Finally, I’ve been thinking a lot about the home mortgage interest deduction.
What if we just got rid of it?
Total federal spending on housing assistance for poor people (less than $20 billion) is dwarfed in comparison to the amount of tax revenue forgone each year (around $120 billion last I checked) because of these deductions, and that’s to say nothing of the impact it has on home prices and development in general. And it covers houses worth up to $1 million.
Relative to eliminating the mortgage interest deduction. Hayduke, you sound like Steve Forbes. I am impressed. Forbes admits it would drive down the value of homes but “so what?” he asks. The deduction artificially raises the prices of real estate and as a result lowers the prices of alternative investments, like stocks and bonds.
Yet it’s stocks and bonds that people need for their retirements. I don’t plan to retire on the equity in my house.
Lower housing costs would spur more home buying, less real estate speculation (although I am not sure about that), increase the tax payer base. People could live closer to work which would help alleviate congestion, the closer people live to work then we may see more business locate to Howard County.
Why won’t it happen? Follow the money. Lower home prices means less margin for developers, smaller commission for the Real Estate industry, lower margins for builders, etc. The industry is a gorilla sitting atop the deduction.
So, do you also support a Flat Tax? I do.
